Changing Paradigms in Procurement

Covid-19 pandemic effects whole World in our lives and business as well. Many workers began to work home office, if possible, workers in manufacturing and production need to work in their factories and offices.

In these days, lead times and stock levels are having more importance than other factors.

Firms need to review their lead times and stock levels in order to get rid of shortage of inputs, spare parts of the machines due to the corruption of the machines and equipment which are critical in their business as well. Not only for manufacturing sector, also service sector firms need to review their sources for sustainability of their business.

Firms who are using ERP/MRP integrated to their procurement systems will also have to review the parameters of lead times and stock levels on their systems and if possible, enlarging contingency levels have to be taken into consideration.

By the nature of their jobs buyers and vendors are used to communicate and negotiate via phones or other communication devices. While they do not have much opportunity for face to face meetings with internal and external stakeholders, it will take longer times of P2P (purchase request to payment) in these circumstances, stakeholders need to be informed about longer procurement process times in order to prevent shortage of products and services.

Price oriented negotiations will be replaced by service or product delivery times and product origins in these days.

Cem Danyal Arslan